Feds scrutinize stimulus spending

Last month Congress passed the biggest spending bill in history, and policymakers want to make sure the money isn't misspent -- a problem Republicans say wasn't adequately discussed before the cash was handed out.

"We need to recognize the huge potential for abuse because of the lack of oversight in the creation (of the American Recovery and Reinvestment Act)," Rep. Brian Bilbray, R-Calif., said Thursday at a hearing in the Science and Technology Investigations and Oversight Subcommittee. "People are … going to be darned upset if we don't do this right."

While the two sides of the aisle may not agree on the prudence of the bill itself, both parties agree that transparency in how the money's spent is crucial. And it's best that the oversight begin before the money hits the road, said Rep. Brad Miller, D-N.C., chairman of the subcommittee.

"With the pressure to move the money quickly, we can not rely solely on audits after the fact," Miller said. "When the stimulus funds run out next year, we want to know where they went and if these funds succeeded in meeting the goals Congress set forth."

The stimulus bill doles out a total of $787 billion, including a hefty sum for science and technology. On Thursday policymakers asked leaders of agencies receiving funds in this area to report on how they would prevent fraud and mismanagement of the money, which is supposed to "provide investments needed to increase economic efficiency by spurring technological advances in science and health," according to the bill.

The entire purpose of the stimulus is to jump-start the economy by creating jobs and pouring capital into the market. That means the money has to move fast -- a task that agency representatives said they're ready to take on.

"We are talking about a matter of weeks -- two or three at the most -- before we begin moving the money out the door," said Cora Marrett, deputy director of the National Science Foundation.

While the goal is to get the money flowing, that can increase the potential for abuse of the funds, said Gregory Friedman, inspector general for the U.S. Department of Energy.

"The potential risk of fraud increases dramatically when large blocks of funds are quickly disbursed," he said. "Our experience in the investigative arena has demonstrated that even during periods of normal operation, the department is vulnerable to the misuse of funds, submission of false or fictitious data, employee conflicts of interest and other wrongdoing."

However, witnesses at Thursday's panel said they've taken major steps to ensure the money is spent wisely.

Fraud-awareness briefings have been held at the Energy Department, which received $40 billion in direct stimulus money plus another $127 billion to make or guarantee loans; the Department of Commerce, which got $7.9 billion, has ramped up efforts to train staff members; and the NSF, which was entrusted with $3 billion, has created a steering committee to oversee and coordinate expenditures of stimulus money, as have many other agencies.

"We want the American people to rest assured that they will know where and how each of the recovery-act dollars is being spent at NASA," which received $1 billion, said Ronald Spoehel, chief financial officer at the National Aeronautics and Space Agency.

That didn't reassure some lawmakers, though, because the Government Accountability Office has identified NASA's contract-management activities as one of the highest-risk areas for funding abuse.

"We're not entirely reassured by the fact that you'll just manage this money like you manage everything else," said Miller, the committee chairman.

Spoehel said NASA began addressing the risk areas identified by the GAO last year.

In addition to these concerns, some representatives and witnesses expressed worries that the drastic increase in funding without an additional increase in staff could create problems.

For instance, the Energy Department's Office of Electricity Delivery and Energy Reliability had a $138 million budget in the last fiscal year. The recovery act injected billions into that department, and now its budget has skyrocketed to $4.5 billion.

The NSF saw a smaller but still significant increase in its budget, but "the staff levels have not been increased," Marrett told representatives.

Other lawmakers, including Rep. Kathy Dahlkemper, D-Pa., wanted to know exactly who the money would help.

"Different areas of the country have been hit harder than others," she said. "Are you taking into consideration at all what areas of the country have the greatest need for jobs and economic development?"

The Energy Department plans to invest stimulus funds in all 50 states and a total of 1,700 municipalities, said Matthew Rogers, senior adviser at the department.

"Every dollar is associated with a number of jobs, a state and the economic impact," Rogers said. "We'll be able to report by state … so you can see that those dollars are going to work in your neighborhood."

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